OTRC: Cate Blanchett reprises 'Lord of The Rings' role in 'The Hobbit'

Cate Blanchett will reunite with director Peter Jackson to reprise her role of Galadriel, the Lady of Lothlorien from "The Lord of the Rings" trilogy in the director's new "Hobbit" films.

"Cate is one of my favorite actors to work with," Jackson told The Hollywood Reporter, "and I couldn't be more thrilled to have her reprise the role she so beautifully brought to life in the earlier film."

The actress will join "The Hitchhikers Guide to the Galaxy" star Martin Freeman, who was cast in the lead role of Bilbo Baggins in October. Other actors joining the movie include Ken Stott as Dwarf Lord Balin, Sylvester McCoy as Radagast the Brown, and Mikael Persbrandt as Beorn.

Despite the recent casting updates, there is still no word if Ian McKellen will reprise his role as Gandalf the Grey.

"The Hobbit" production has experienced a substantial amount of production problems, the biggest of which was a dispute with actor's unions in New Zealand, Peter Jackson's homeland and the filming location of the original "Lord of the Rings" trilogy.

The government of New Zealand struck a $25 million deal with Warner Bros., in October in order to keep the film from relocating to another country. In addition, the government also promised labor law changes.

The country was in danger of having the film, worth an estimated $500 million move its production to another country after unions called for a world boycott of it over salary and working conditions. The boycott was later called off.

Jackson has had to deny his production company underpaid actors. It was announced in October the two "Hobbit" films, set for release in December 2012 and December 2013, will begin filming in February.

Additional aspects of the deal included New Zealand expanding its film subsidy program for big budget films, providing an extra $7.5 million tax rebate for each "Hobbit" movies. Warner Bros. also agreed to a joint deal with the country to market New Zealand as a film production and tourism destination.

"Making the two Hobbit movies here will not only safeguard work for thousands of New Zealanders, but it will also follow the success of the 'Lord of the Rings' trilogy in once again promoting New Zealand on the world stage," New Zealand Prime Minister John Key told The Associated Press.